Got You Covered: Small Business Risk Management

The Art of Insurance and Small Business Risk Management

by Marilyn Miller

If you risk money in the stock market, you are taking a speculative risk. This means you have a chance to win, but also a chance to lose. However, business risk management includes dealing with risks that are subject to “pure risk” with no chance to win. There is only the certainty of loss.

Some examples of pure business risks are fire or wind damage, customer slips and falls or employee injury.

Business owners often buy insurance to transfer the financial responsibility for loss to an insurance company. That is a good thing. But a smart small business owner uses many tools to manage business risks.

A business “risk manager” identifies business risks, works to prevent them, controls losses when they do occur and transfers the risks to others.

To learn more about business risk management, I spoke with Bill Exley of Clark Insurance. Bill is an insurance professional who has been acting as an “outsourced risk manager” for Maine businesses for 24 years.

Bill takes a long term view with his customers. He has partnered with many small businesses to help protect their interests while they grow. He takes great pride in the fact that he has worked with local companies like Portland Pie, Rosemont Market & Bakery, the “Rooms” restaurants, Vessel Services, Tammaro Landscaping, Casco Systems.

Risk management is not simply about buying insurance policies. The art of business risk management, according to Bill, is being in regular contact with customers. It is about advising them when new business ventures create the risk of loss. It is also helping customers decide the best way to deal with risk.

When Bill recently learned that one of his clients was leasing and renovating new office space he worked with them to revise their property coverage to include the cost of the improvements. He also made sure they knew they knew how to make sure the contractors working for them were properly insured.

Bill explains that some small business owners suffer unnecessary financial loss due to not having the right policies in place when they are needed.

“Business owners either don’t want to pay for them or don’t get the right advice,” says Bill.

The value of an insurance policy really comes to light when there is a loss. To Bill this is the joy of business insurance and business risk management.

Marilyn “Mara” Miller

“Delivering on the promise of coverage when a claim occurs is a great feeling. ‘It worked like I promised you it would.’”

Small business owners should seek an insurance agent who will not only provide the basic liability and property policies, but also address emerging concerns. These could include data breach and cyber liability or lawsuits brought by employees for harassment or wrongful termination.

The old days of the “insurance guy” who sold you a policy and was never seen again are gone. Your risk and insurance professional should not only be the person who sells you insurance policies. They should be a trusted adviser and partner who grows with you.

Marilyn “Mara” Miller is committed to small businesses. She is founder of M3 Consultants, which helps small business owners improve their cash flow through better credit practices.

If you have comments or ideas for future issues, please email Marilyn at m@m3lp.com.